Arista Networks Grows in 2017, as Cisco Legal Dispute Nears an End

Arista Networks has been engaged in a back-and-forth legal battle with Cisco since 2014, but that fight could be nearing an end. Legal concerns aside, Arista grew its business in 2017, as enterprises and cloud operators alike adopted the networking vendor’s technologies.

Arista reported fourth quarter revenue of $467.9 million for a 42.7 percent year-over-year gain. For the full fiscal 2017 year, Arista’s revenues came in at $1.6 billion, for a 45.8 percent gain over fiscal 2016. Looking Arista Leaf/Spineforward, Arista provided first quarter fiscal 2018 guidance for revenues of approximately $450 million to $468 million.

“In terms of verticals, in Q4 2017, enterprise was our number one vertical for the very first time in our public company history,” Arista CEO Jayshree Ullal said during her company’s earnings call.

Cisco Lawsuit

Cisco first alleged that Arista was in violation of a number of its patent back in December 2014. The protracted legal showdown  has had multiple milestones along the way, with each vendor claiming a victory of sorts.

Arista has been building and shipping devices that include workarounds for various patents as legal settlements have required. Arista general counsel Marc Taxay noted on the earnings call that a federal circuit judge affirmed an earlier U.S. Patent Trial and Appeal Board (PTAB) decision to invalidate one of the Cisco patents, known as the 668 patent. There are still multiple additional patents, including the 945 patent, that are still at issue.

100 GbE

A core area of growth for Arista has been in the 100 Gigabit Ethernet networking area, where the company has the leading market share.

“2017 has also been an important inflection year for both our routing and 100 gigabit Ethernet products,” Ullal said. “I expect robust growth to continue ahead in 2018, together with our entry into 400 gigabit Ethernet next year.”

Though 400 Gigabit Ethernet is coming, that doesn’t mean 100 GbE deployments will slow down.

“We saw that 10 gig had a very long tail for almost 10 years and then many vendors jumped into 40 gig as did Arista,” Ullal said. “But 100 gig, we believe first of all, has an extremely long tail, unlike 40 gig.”

Ullal said that 400 GbE is going to be very important in certain use cases, and Arista aims to be an early market leader. That said, she noted that the mainstream 400 GbE market is going to take multiple years to mature.

“I believe initial trials will be in 2019, but the mainstream market will be even later,” Ullal said. “Just because 400 gig comes, by the way, doesn’t mean 100 gig goes away; they’re really going to be in tandem. The more we do 400 gig, the more we will also do 100 gigs. So they’re really together. It’s not an either/or.”

Not a Router Company

In response to an analyst question, Ullal stated that Arista isn’t a router company.

“In terms of products that are in the market, there’s a lot of routers in the market; Arista is not a router company,” Ullal said. “What we’re really doing is moving to more and more use cases for routing and really peering use cases, peering across the Internet, across content and across the cloud.”

Ullal explained that Arista’s leaf/spine architecture is what helps to define the company’s core promise. The Arista 7500R and 7280R devices, in her view, stand out for being not just great routing, but great switching devices.

“We think it’s truly unique and differentiated, and that’s reflected in why we’ve been so well accepted this last year,” she said.

Sean Michael Kerner is a senior editor at EnterpriseNetworkingPlanet and Follow him on Twitter @TechJournalist.

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